Dynamics of the religious economy - Exit, voice and denominational secularization

This paper develops a dynamic model of the religious economy. In the model, individuals with higher incomes prefer less strict denominations. If individuals remain within their parents' denominations, intergenerational social mobility may alter denominational class composition, inducing change in denominational strictness. New denominations then form in the market niches abandoned by older denominations. I characterize the dynamics of the model through a series of examples. In one case, the model generates the pattern of denominational secularization and sect formation observed in the American religious economy; the rise and fall of particular denominations is consistent with stability of the religious economy as a whole. However, the model may generate other dynamic patterns in which denominational strictness levels are stationary or denominations become desecularized through time. Two 'religious capital' parameters, characterizing the strength of denominational loyalty and its relationship to denominational strictness, play key roles in determining which pattern emerges.